For most businesses, hiding negative environmental impact, or trying to distract from it via charitable donations is thankfully, so last century. Fast forward to the cusp of 2023, and we’ve come a long way. Now, reducing carbon your footprint is standard operating procedure for many, and monitoring and measuring environmental impact is a priority for boards and the C-suite. Most leading businesses have enshrined sustainability targets into their environmental, social, and corporate governance (ESG) standards.
In other words, climate action has started to go mainstream in the business world. But releasing greenhouse gas emissions into the atmosphere isn’t the only negative impact businesses have had – and reducing their carbon footprint isn’t the only way they can do good. Water quality, plastic waste, biodiversity and the health of natural ecosystems; these are all pressing environmental issues. And as with carbon emissions, corporations can play an important role in ensuring these challenges are properly addressed.
Thankfully, businesses working to combat climate change don’t have to go it alone. A wide range of market-based mechanisms are emerging to help meet (and even exceed) ESG goals, with carbon credits just one part of the solution.
In this article, we take a look at three new environmental markets that move beyond carbon. Each market focuses on a specific environmental issue, and provides a targeted, financially incentivised method to drive long-term behaviour change and put the environment on the balance sheet.
For years, the production of disposable plastics has outstripped our ability to process them, making plastic pollution one of the most pressing environmental issues facing the planet. Technically, it’s solvable: people can use fewer plastics, we can recycle, and companies can reduce plastic waste from their value chains.
Unfortunately, zero plastic isn’t an overnight option for some industries yet. But that doesn’t mean they can’t take action. Enter Plastic Credits, an environmental market designed to help reduce plastic waste in the aggregate, while enabling those who can’t (yet) go without to take ownership of their plastic footprint and make a positive difference.
A single Plastic Credit is generated when a verified plastic waste producer is able to remove, reuse or recycle one tonne of plastic from the environment. Currently, GreenCollar is working with banana farmers in Far North Queensland to responsibly discard or recycle the single-use plastic covers they have traditionally used to protect banana bunches as they ripen. The more covers they remove and recycle, the more Plastic Credits they earn – and the more credits other companies can purchase to help meet their ESG goals.
In 2019, the Great Barrier Reef’s long-term outlook was downgraded to “very poor” – and things haven’t improved much since. One of the causes is fine sediment and dissolved inorganic nitrogen flowing into the reef from farmland across Queensland. Despite farmers’ best efforts, changing land management practice can be an expensive business, which is exactly the problem the Reef Credits Scheme seeks to solve.
The first water quality market of its kind in the world, Reef Credits pay farmers and land managers to make changes in how they use and look after their land. These can be subtle, such as changing the way they apply fertiliser, or more intensive rehabilitation projects to restore gullies or establish wetlands that naturally filter sediment from runoff. Either way, they result in less pollutants reaching the Great Barrier Reef without impacting productivity of the land, creating local jobs, and netting farmers extra income for their efforts.
Until last month, the Queensland Government was the largest buyer of Reef Credits. But Qantas has just committed $500,000 to purchase 20 per cent of all Reef Credits produced to date, paving the way for more businesses to invest in the health of the Great Barrier Reef. The bulk of the revenue made from the sale of Reef Credits goes straight to farmers, providing them with the additional income needed to make ongoing improvements to the land.
Biodiversity may well be the single most important aspect of a healthy planet. Everything, from the air we breathe and the food we eat, to the economy at large, relies on a great variety of plants, animals and microorganisms working in tandem to keep ecosystems in balance.
It’s no surprise, then, that businesses are beginning to take biodiversity loss seriously. By investing in programs that protect natural habitats and strengthen biodiversity, companies can help ward off catastrophe, while simultaneously assuring investors and stakeholders that they’re addressing one of the largest environmental challenges facing the planet.
And we’re not talking about protecting a piece of forest over here so you can clear one over there. NaturePlus™ Credits are focused on additionality with a view to achieving ‘Nature Positive’ outcomes that will see ecological systems improving and rebuilding by 2030.
While most payments for biodiversity outcomes are based on actions that are carried out with a view to improving biodiversity in the future, NaturePlus™ Credits are only awarded to projects that have already delivered third-party audited and certified improvement in environmental condition. This means investment in NaturePlus™ Credits represents positive outcomes for nature.
GreenCollar is running 20 NaturePlus™ pilot projects in Australia with a view to valuing and rewarding adaptive land management that delivers benefits for native ecosystems and species. The first credits are expected to come to market in early 2023.
Environmental markets: the way forward
According to a 2021 report by the UN Environment Programme, over AU$11 trillion worth of investments need to be made in nature-based projects by 2050 if the planet is to come out the other side of the interlinked climate, biodiversity and land degradation crises it currently faces.
That sounds like a lot of money – and for any individual, it is. But with robust, science-backed environmental markets working to make investment in the environment that much smoother and more rewarding for companies, it’s not only an achievable goal, but a desirable one.